Europe Outperforms | Tesla Tanks

28 January 2022

Global markets were mixed overnight, as US markets (S&P 500 index -0.5%) ended another session marked by volatility lower. US stocks started in the green, but see-sawed back to a loss as volatility continues as investors balance the Fed’s recent announcement with economic and earnings data.

Fourth quarter US GDP rose +6.9%, bolstered by increased private inventory investment and was well ahead of expectations of +5.5%.

In stock news, Intel fell -7% despite a sound result, as it provided weak guidance due to supply chain issues. Netflix rose +7.5% after news Pershing’s Bill Ackman bought 3.1 million shares, stating the stock appears attractively priced.

Apple shares are up during aftermarket trading after reporting a solid quarterly result after the closing bell, beating analysts estimates across all product categories and noting that supply chain issues were improving.

European Markets (Stoxx 600 index +1.7%) in contrast closed higher despite Fed jitters, comforted by a slew of strong European earnings results. European markets also have less of a technology stock bias, compared to the US.  


Tesla shares slumped -11.5% yesterday despite reporting its fourth quarter earnings which beat expectations across all key metrics. Tesla delivered revenue of $17.7 billion (up +65% year on year) and earnings per share of $2.54 up over 8x from the same corresponding quarter last year as they delivered 936k cars for the quarter, also beating market expectations.

What weighed down on the shares was commentary that that supply chain constraints will continue to restrict production levels for 2022, with Tesla not being able to operate at full capacity, as well as Tesla focusing on developing a humanoid robot rather than launching new car models this year.

Tesla shares are now down -43% from its all time high in November 2021, and down -4% over the last 12-months wiping away its 2021 gains. We remain HOLD rated as we believe the stock is still over valued and trading at too rich valuation multiples which we still find difficult to digest. 



Australia & New Zealand Market Movers

The Australian market was down on Thursday (ASX200 index -1.8%) entering correction territory post the hawkish tone from the US Federal Reserve.

Tech stocks led losses followed by retail and healthcare, as most sectors traded sharply lower – stocks trading on high valuation multiples continue to be hit harder. Energy and Utilities were the only sector in the green, the former benefitting from surging oil prices as oil futures reach US90 a barrel.

Aristocrat fell -4.5% over fears its planned takeover of Playtech would not be completed. slumped -12.3% after its trading update missed earnings expectations due to rising costs.

The New Zealand market (NZX 50 index -1.1%) was down yesterday, as NZ’s inflation surge to 31 year highs and the Fed confirmed their hawkish outlook.

Local tech stocks continue to sell off hard following wall streets lead, Pushpay down -3.5% and Serko falling -2.7%. 

Selling was broad-based in anticipation of higher interest rates market heavy weights mostly trading lower Fletcher Building and Ryman Healthcare both down -3%, Auckland International Airport slipping -2.4%, Fisher and Paykel Healthcare -2.3% and Contact down -1.7%.

3 Things Markets will be Watching this Week

  1. The US Fed Interest rate decision this week will be closely watched.
  2. US earnings season gets into full steam, with Philips, J&J, GE, Microsoft, Tesla, Intel, McDonalds, Apple, Visa, Chevron, Caterpillar and Colgate-Palmolive reporting this week.
  3. Locally, Australia and New Zealand’s CPI (inflation) data is released.
Global markets were mixed overnight, as US markets (S&P 500 index -0.5%) ended another session marked by volatility lower.

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